740.00118 European War 1939/1814

Memorandum of Conversation, by the Assistant Chief of the Division of European Affairs (Hickerson)

Several days ago Mr. Helm, while in my office discussing a number of other matters, brought up the subject of the application of the British blockade to trade destined to certain countries in the Mediterranean. In talking to me he read, from time to time, from a telegram which the Embassy had received from the Ministry of Economic Warfare.

As regards exports destined to Hungary he said that the British Government was at the present time passing “practically nothing”. He said that the Ministry of Economic Warfare had stated that they would be prepared to allow goods destined to Hungary on special occasions, particularly in connection with barter deals, when they had satisfactory guaranties that the goods destined to Hungary would not, directly or indirectly, enhance the German and Italian military effort. He added, however, that generally speaking the Ministry proposed to let almost no goods at all through to Hungary.

As regards shipments destined to Rumania, he said that in general a policy similar to that in regard to Hungary would be followed. He said that the telegraphic instructions stated that if Rumania “helped out on oil” a more lenient attitude might be assumed; but he went on to say that this telegram had apparently been written before the latest developments in Rumania and there seemed to be no real ground for expecting cooperation from the present Rumanian Government on oil.

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A similar policy, he stated, would be followed in general in respect to goods destined to Bulgaria, but that the Ministry of Economic Warfare would look with favor on deals to purchase oil seeds from Bulgaria, and would be disposed to pass shipments to that country if it could be established that such shipments would actually move oil seeds out of Bulgaria. The motive of course is to prevent oil seeds from getting to Germany and Italy.

In respect to shipments destined to Yugoslavia Mr. Helm stated that the Ministry of Economic Warfare anticipates that there will be little demand for goods originating outside of the Mediterranean area because, he stated, the shortage of shipping and exchange make it almost impossible for Yugoslavia to purchase goods outside of Europe. He commented that the British Government has an agreement with Yugoslavia under which the United Kingdom has preempted the purchase of certain minerals and has promised to supply raw materials in payment for these minerals.

As regards Greece Mr. Helm stated that the British Government is disposed to follow a more liberal policy than in respect to any of the other countries mentioned above, but owing to the uncertainties surrounding Greece’s political situation he intimated that there might be a rapid change in attitude.

Mr. Helm went on to say that with the foregoing paragraphs as a background he had been instructed to sound us out very informally with the view to finding out what would be our attitude if they should present a proposal to us that all shipments to Hungary, Bulgaria, Yugoslavia, Greece and Rumania of the following products be made, irrespective of the source of the goods, through the United Kingdom Commercial Corporation:

  • jute and manufactures
  • rubber and manufactures thereof
  • tin and tin plate
  • raw cotton, cotton yarn, thread and cotton piece goods
  • wool noils, tops and yarns
  • tea
  • coffee

Mr. Helm stated that the United Kingdom Commercial Corporation, as I probably recalled, was a concern organized by the British Government to handle trade between the United Kingdom and the Balkan countries, with particular reference to correlating purchases in such a way as to be of the greatest possible utility in furthering the work of the Ministry of Economic Warfare. He said that their instructions pointed out that the advantages of funneling all shipments of the above-mentioned products into the countries listed through this Corporation would be as follows: (1) It would give the British Government [Page 57] the bargaining power for acquiring oil seeds and other goods which Germany needs; (2) it would lead to the most effective utilization of shipping space; (3) the British Government might reap a certain amount of political credit in the Balkans since the United Kingdom Commercial Corporation is known to be controlled by the British Government. He concluded by stating that if such an arrangement were made the British Government would of course give us complete assurance that American trade would in no sense suffer because of the channel through which it reached the purchasers in the Balkans.

I replied at once to Mr. Helm that my immediate personal reaction to such a proposition was a most unfavorable one. I told him that in my opinion it would be resented by American commercial interests, and that every deal which was made by the United Kingdom Commercial Corporation would probably lead to some criticisms that the trade of one supplying country had been favored at the expense of others. I commented that these objections which I saw to the project were based on practical grounds and that I would make no comment whatever on the proposal in so far as international law and neutral trade rights were concerned. I added, however, that this reaction on my part was my preliminary personal reaction and that if he liked I would think the matter over and consult with various of my colleagues at a later date. He said that he would be glad if I would do so.

I have a feeling that the personal reaction which I displayed to this proposal was more or less what Helm expected I would say.

J[ohn] D. H[ickerson]